Earlier in the week the Federal Reserve Bank indicated that they will back Fannie Mae and Freddie Mac with a line of credit and buy stock in the companies as needed. The aim is to help the only functioning secondary market for mortgage backed securities.

Many people are concerned that the taxpayer will be on the hook for billions of dollars. So the question that begs asking, how much more will the average tax payer pay to stabilize the credit market? And ultimately the housing market. Also is this for the greater good?

While housing is a small part of the Gross National Product; we have seen how it can affect the rest of the economy.   A reduction in home sales has reduced the demand for consumer products such as appliances, furniture, and other stuff for new homes and home renovations. Which also reduces state and local tax revenues.

Speaking of taxes, what of the income tax, on job losses, people making products, people installing products, people making improvememts. Unemployed tradesmen; carpenters, plumbers, and electricians. Again tax revenues will decline.

So will tax payers be on the hook for billions of dollars? Let me ask this; will all the loans that Fannie and Freddie have in their portfolio default? I don’t think so. In fact all this ‘chicken little mentality’ that the media hits us with, never ever mentions the fact that many mortgages are still performing. And I believe that many bank stocks will improve because many of the mortgages they have in their portfolios are performing loans.

I believe that what the Fed is doing is really an investment, will it cost the taxpayer in the short run? Possibly, but in the long run I believe that there will be a positive payoff. Don’t forget that mortgages are backed up by real estate. The demand for real estate never really goes down. People have to live some where; and land…well land is finite.

Put me down for paying more taxes, because this is for the greater good. Probably better spent than where some of my other tax dollars are going.